In Payroll, Dodgers Tell Yankees to Move Over
By TYLER KEPNER
Published: December 15, 2012
The real story, Stan Kasten insisted, is not the payroll. The resurrection of the Los Angeles Dodgers cannot be measured by the sum of their salaries, as staggering as that total has become.
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Magic Johnson, right, a Dodgers co-owner, with Zack Greinke, who signed a six-year, $147 million deal.
Yet all people talk about is the payroll, which seems to have no limits and has positioned the Dodgers as the West Coast version of the Yankees — if the Yankees spent a little more. Even the Angels, who have lured Albert Pujols and now Josh Hamilton to Anaheim, cannot match the Dodgers in spending.
The Yankees have had the major leagues’ highest payroll in each of the last 14 seasons, six times topping $200 million, according to Baseball Prospectus. But the Dodgers will hold the top spot in 2013, having committed more than $210.6 million to 21 players, with another $11.5 million owed to the departed Manny Ramirez and Andruw Jones. Barring trades, and including the undetermined salaries for younger players filling out the roster, the payroll almost certainly will be a major league record.
It is twice the payroll the new owners, led by Mark Walter, Magic Johnson and Kasten, inherited last May, when they bought the club for $2.15 billion. The Dodgers have made more than $600 million in salary commitments since then, transforming the culture of a team that was emerging from bankruptcy under the previous owner, Frank McCourt.
“I understand the questions about it,” Kasten said. “But no one quite understands the economics of, first of all, the transaction that we made and the resources available in terms of support — whether it’s support from fans buying tickets and hot dogs, the strategic partners who want to be aligned with us, or sponsorship and media partners. There are a lot of good things, and unique things, available in this market.”
Kasten would not address specifics of the Dodgers’ finances, which have become increasingly confounding to rival executives who wonder how they can afford it all in absence of a firm commitment on a new television deal. Walter’s company, Guggenheim Partners, is a global financial services firm that manages some $125 billion and used its Indiana-based insurance companies to pay for the team. A coming TV deal is presumably underwriting, and motivating, the spending spree.
More and more, local cable contracts are driving the industry because of the value of live programming in the DVR age. Fox will carry the Dodgers’ local telecasts for one more season and has reportedly discussed a 25-year extension for $6 billion. But the Dodgers have other options, and thus negotiating leverage. They could switch to Time Warner or create their own network, as teams like the Yankees have done.
The Yankees have a roster full of must-see players, and the Dodgers have added several high-profile and well-paid stars since the middle of last season. They traded last summer for Hanley Ramirez, Josh Beckett, Carl Crawford and Adrian Gonzalez, and last week signed Zack Greinke for six years and $147 million, a $24.5 million annual average that is the highest for a pitcher on a multiyear deal. They also invested $61.7 million — in a six-year contract and a posting fee — for the South Korean left-hander Ryu Hyun-Jin.
Vince Gennaro, the author of “Diamond Dollars: The Economics of Winning in Baseball” and a consultant to several clubs, said: “When you have the kind of TV deal on the table that’s been discussed, and something like that is imminent, I think that goes hand-in-hand with spending to win on the field. I really don’t think, in that context, it’s irrational in any way. Before people get wind of the TV deal, they’ll think that’s a lot of payroll — but not when you look at it in the context of what’s at stake. I’m sure the media partners, if they’re putting that kind of money out there, are not expecting the Dodgers to come up short in trying to win.”
Although the Dodgers have homegrown stars in Matt Kemp and Clayton Kershaw, the McCourt ownership spent little on player development, with a major-league-low $300,000 international budget in 2011. Last winter, with ownership in limbo, General Manager Ned Colletti was limited to low-cost additions like Chris Capuano and Jerry Hairston Jr.
EDB

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